Have you ever done this? Gotten a new client, received their payment and immediately “splurged” on an item you’ve had your eye on for a few months now? If so, this is the wrong way to handle the money coming into your business. Let me explain why you should have a separate bank account for your business.
It keeps you accountable and believe it or not is easier to manage a personal bank account for household bills, shopping and have a totally separate account for your business. That means a separate account that you use to pay for your domain renewals, book covers, webinar services or other expenses that come up on a monthly basis. This will also keep you realistic about what your business is actually making and can even prompt you to set goals to reach the level of earnings you want to see in your business this year and/or control your spending too.
It makes sure you reinvest. Those who have a bank account for their business are more likely to reinvest BACK INTO their business because it equips the entrepreneur with a sense of ownership; meaning the more you earn the more you can spend, spruce up your business and purchase new gadgets and/or services. When it comes to business and earning, not only should you reinvesting back into your business, but in all actuality you should be paying yourself a percentage of each invoice or a flat “fee” every month. This green lights the term “self-employed”.
Creates a file system for tax time. I remember when I was first starting out, I had to dispute a charge on my credit card. The only thing was I couldn’t remember which account I paid “said” charge out of. When tax time comes many business owners are all over the place. But with a separate bank account your purchases aren’t mixed in there with receipts from your last pedicure. Keeping your business account separate from your personal one makes it easier to track your purchases and you wont have to wonder what account you used for which puchase because your business account is for business and everything else . . . is not.
If you’re not doing this already START NOW! Looking for a great additional bank? Here are 2 “online” banks that I use and recommend: GoBank and Ally Bank and both let you start a new account with next to nothing.